The Best Guide to Medical Invoice Factoring

Strong medicine for your business

One of the most frustrating aspects for many healthcare professionals is the time it takes to receive payment on invoices. Financing invoices with insurance companies, medical vendors, and service providers can complicate medical billing practices, restrict cash flow, hinder finances, and stunt growth.

Add in the intricacies of each company’s unique billing requirements, government regulations, and Medicaid/medicare receivables standards, and it’s little wonder invoices can take months to be paid. Too many payment delays can leave healthcare providers struggling to make ends meet. Invoice factoring loans for small businesses can help provide consistent cash flow and cover cash flow gaps.

Big and small health-related businesses can benefit from medical invoice factoring, also called medical receivables factoring or just medical factoring.

What is Medical Invoice Factoring?

U.S hospitals have some of the highest operating costs of any industry, a whopping $1,112,207,387,000, in 2020¹, and that doesn’t consider smaller providers and clinics. Unfortunately, one of the biggest challenges for most healthcare companies is the time it takes for invoices to be paid, often between 90 and 120 days. 

Medical invoice factoring, also called medical factoring, or medical receivables factoring turns invoices from third-party payers (Medicare/Medicaid, HMOs, private insurance companies, workman’s comp. insurances, etc.), into immediate capital. Home health care, hospitals, eye doctors, dentists, and other health-related industries can benefit from medical invoice factoring. 

Factor refers to the purchase of accounts receivables at a discount from a provider’s billed charges by a factor company. The money that is disbursed to the medical facility as payment for the accounts receivables/invoices by the factor company is called an “advance.”

  • Medical invoice factoring is not a loan. 
  • It provides immediate access to cash with little or no wait period.
  • It removes the frustration of collecting payment from slow-paying customers.
  • It is a practical solution to improve or maintain a positive cash flow.
 

Generally, there are two types of medical factoring:

  • Medical Invoice Factoring. For health-related providers that rely on insurance claims.
  • Healthcare Invoice factoring. For vendors and service providers that offer goods and services to healthcare facilities.

Medical Factoring vs. Healthcare Invoice Factoring

Although medical factoring and healthcare invoice factoring are often used interchangeably, they are different.


Medical Factoring addresses the needs of physicians, dentists, eye doctors, medical specialists, etc., who provide direct care to patients but risk cash flow issues from slow-paying third-party payers. These payers might include Medicare and Medicaid, the government, HOMs/PPOs, and private insurance carriers.


Healthcare invoice factoring provides funding to small commercial vendors and service providers that provide goods and services to the medical industry. This might include medical staffing agencies, medical supply companies, IT companies, transcription services, and medical coding companies.

How does Medical Factoring Work

FundThrough provides unlimited working capital based on the size of your outstanding customer invoices. Transactions are automated, and payment is prompt. It’s a straightforward process.

    1. Companies send invoices to their customers.
    2. Health-related companies submit approved unpaid invoices to FundThrough.
    3. FundThrough purchases your invoices and advances up to 80% of the expected net collectible value. 
    4. FundThrough waits for invoices to be paid by insurers. 
    5. FundThrough pays medical insurance claims to you in as little as one day.
    6. Healthcare providers receive up to the remaining 20%, minus a fee (based on invoice terms). 

The amount advanced varies based on the amount of the claims and the size of the medical facility.

Which Companies Can Use Medical Invoice Factoring or Financing?

Medical invoice factoring can be used by any healthcare provider that works with private insurers or government insurance programs. Companies may include:

  • Hospitals
  • Medical offices
  • Clinics
  • Dentists
  • Assisted living facilities and nursing homes
  • Private physicians offices
  • Medical supply companies
  • Pharmacies
  • Surgery facilities
  • Mental health providers
  • Ambulance providers
  • Medical staffing agencies
  • Surgery centers
  • Diagnostic imaging centers and MRI clinics
  • Medical labs
  • Physical therapy facilities
  • Small businesses that educate people on health-care related topics
  • And more.

Healthcare factoring is also for vendors that rely on payments from healthcare providers, including:

  • Medical equipment suppliers
  • Transcription providers
  • IT companies
  • Medical coding companies
  • Transcription companies
  • And more.

What Problems Does Medical Factoring Solve?

One of the biggest challenges in the healthcare industry is controlling cash flow because invoices from insurance companies are often paid at a snail’s pace. Very few claims are paid quickly.

Payroll, equipment, and operating expenses still must be paid on time. And most healthcare businesses—especially those growing quickly—can’t wait for Medicare, Medicaid, or private insurance companies to pay.

On top of that, medical factoring with FundThrough also solves these problems:

  • FundThrough cuts out the waiting time to be paid on invoices by 97%.
  • Your cash flow is accelerated.
  • Factoring allows you to have effortless access working capital that’s tied up in accounts receivables due to slow-paying customers.
  • You get the full value of your invoice(s) to your business bank account in as little as 24 hours with FundThrough.
  • You can have peace of mind your invoices will be paid.
  • As a factor, FundThrough offers competitive pricing, professionalism, and respect for your clients.

Self Care Catalysts (SCC) partnered with FundThrough to accelerate its cash flow, making it possible for SCC to pay various fixed costs and keep up with their billion-dollar healthcare clients. SCC clients include pharmaceutical manufacturers, hospital systems, academic institutions, and clinical research organizations.

Advantages of Medical Invoice Factoring

Besides the problems that medical invoice factoring solves, the advantages are just too critical for your business to ignore.

  • You choose which invoices to fund.
  • Factoring is not a loan that you pay back with interest.
  • You have protection from bad debts.
  • It helps maintain cash flow so you can grow your business.
  • Unlimited funding potential.
  • You retain those close relationships with your customers. 
  • You maintain the equity in your business.

How to Qualify for Medical Factoring

Qualifying for medical factoring with FundThrough can be easier than qualifying for a loan. Plus, it doesn’t rely on your credit score. But, you may need to meet certain requirements.  

  • You must operate a business that works with Medicare/Medicaid, HMOs, private insurance companies, workman’s comp. insurances, personal injury lien settlements, etc.
  • Invoices must be for a completed claim.
  • Generally, you can’t have an unsolved bankruptcy, liens, or unpaid taxes that impede accounts receivables.
  • Invoices must be less than 90 days old.

Fortunately, when your small business is growing fast, but cash flow is tight, FundThrough offers the best factoring solution to fit your funding needs.

Medical Invoice Factoring FAQs

Your questions answered.

When you factor an invoice, you are essentially selling your unpaid invoices to a factoring company—FundThrough. In return, you receive an advance, which allows you access to working capital. The remaining balance is paid to you when FundThrough receives payment from your customer.

Factoring, also called invoice factoring, is when a domestic company receives an advance, usually 80%, against unpaid short-term accounts receivables.


Forfeiting is a type of international trade financing. It deals primarily with medium- to long-term accounts receivables and is a financing option used by exporters to receive 100% financing based on exported goods’ value.

No, medical invoice factoring is not a loan.  It is instead an advance on your unpaid accounts receivables. Your credit does not matter, and your credit score will not be impacted when you factor invoices.

Simple. Intuitive. Medical Invoice Factoring.

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